E-LOGISTICS STRUCTURE AND OPERATION
Volumn 2

E-LOGISTICS STRUCTURE AND OPERATION

Prof. Ninad N. Kashikar
Asstt. Professor
Kamla Nehru Mahavidyalaya
Nagpur

Abstract:

E- commerce is another way of doing business. There are three general classes of e-commerce applications : B2B, B2C, and intra business commerce. The products and services are displayed in digital form on the website for selection. All business transactions from the placement of order to payment collections are carried out electronically. Hence logistic support for e-commerce business is different than traditional model. Since all transactions are carried out electronically material movement is faster than normal. This is done with the help of IT support. E-commerce logistics allows the enterprise, the vendors, the logistics service providers, the trading partners and the customers to communicate and collaborate in the supply chain on a real time basis. Online information sharing increases visibility, speed and accuracy in material movement across the supply chain and brings efficiency and effectiveness to the process of material delivery to the customer. Wal-Mart, Amazon.com eBay and Dell computers are among the world’s most successful e-commerce companies which operate on web based logistics solution to ensure reliability and consistency in product delivery and customer service.

Keywords – E-commerce, E-logistics, Supply chain, Third party Logistics ( 3PL ), Business –to-Business commerce ( B2B ), Business-to-Customer commerce ( B2C )

Introduction

Meaning of E- Commerce

It is commonly described as a method of buying and selling products and services electronically.

The main component of E-commerce remains with Internet and www i.e. world wide web but

use of e-mail, Fax and telephonic orders are also prevalent. E-commerce is the application of communication and information sharing technologies among trading partners to achieve the business objectives.

There are many E-commerce applications. Consumer oriented application can be classified as

  1. Educational and Training
  2. Entertainment
  3. Financial Services ( banking )
  4. Essential services

Meaning of Logistics and Logistics Management

Logistic is concerned with getting products and services where they are needed and when they are desired. It can broadly classified in to

  1. Business Logistics
  2. Event Logistics
  3. Service Logistics
  4. Military Logistics

Logistic Management – It is the process of planning executing controlling the efficient, effective flow and storage of goods and services and related information to fulfill the satisfaction of customer.

Objectives of Logistic management

  • To make available the right quantity of right quality products at the right place and time and in good condition.
  • To offer and give best services to customers to reduce the cost of operations
  • To maintain transparency in operation so that customers confidence can be boost.

Meaning of E-commerce Logistics

The progress in technology and its innovation has totally changed the way of business done in Industry. Technological innovation has changed business boundaries of traditional shopping.

The development of internet has shrunk the world in global market. Hence business transctions can be carried out at and from any corner of the world on real time basis. The scope of

E-commerce is very wide. It not only covers buying and selling of products electronically but also various processes internal to the organization. E-commerce has changed the way of products and services sold. It also redefines the relationship between the buyer and seller.

There are three general classes of e-commerce

  1. Business to Business ( B2B ) commerce – This means the application of e-commerce in business transactions between organizations.
  2. Business to Customer ( B2C ) commerce – This covers the interaction between an organization and the end consumer. Here the company publish products electronically. The consumer will then place their order through electronic media. After the order of customer, it is physically delivered to the customer. The company will ask for payment electronically in advance or immediately after the delivery of product.
  3. Intra Business Communication – This involves the application of e-commerce for organizing resources and co-ordination of activities within the organization so as to deliver good value to the customer.

Objectives of study

  • To define what is E-commerce in logistic Management
  • To discuss the application of E-commerce in e- logistics
  • To understand the life cycle of implementation of e-logistics
  • To understand Inventory Management in e-logistics

A firm desirous of offering goods on the internet needs to develop a proper infrastructure for electronically integrating all the operation of logistics in order to ensure consumers satisfaction before during and after the buying process.

E-logistics structure and operation involves following

Order processing – The consumer after visiting particular company’s website may select one or more items for purchasing. Many websites offers an electronic bucket for customers to pick up the product they want to purchase. The dialog box requires reconfirmation from customer.

For this customer may b asked to pay full price of product for low unit price or low value orders

The mode of payment is to be done through credit card, debit card etc.

For high value orders sometimes order will be processed with credit terms as per the company norms.

In case of B2B transactions, for recurring purchases order processing system needs to build a database of the order history for offering quantity discounts or for certain credit concessions.

The inbuilt software will check the prices, taxes, payments terms and delivery. The order will accepted for execution only after it is technically cleared and same will be confirmed to the client electronically.

The order processing on some sites is done online while some may opt batch processing at the end of the day. For these companies order processing is very important as it involves the setting of standards to meet customers expectations.

Order Execution – Once the order is accepted for execution, instructions are passed to Inventory manager or directly to the vendor for case filling and packaging. The delivery instruction covers all i.e. consignee details, product details, quantity and packaging. The vendor or warehouse manager gives instructions to courier service or 3PL partner to pick up the consignment for delivery to the client. All this is done electronically. The delivery details will be immediately conveyed to the customer along with the invoice copy.

Inventory Management – This is another important operation in E-logistics because the firm has to integrate all online order and should be placed for execution. In case an item is not in stock and is under process, late delivery will have to confirm to the consumer before the order is accepted. Fulfilling delivery commitments to customers must be seen as paramount if the seller is to remain competitive. So the firm needs to have back up inventory control system that co-ordinate the movement of material right from procurement to distribution centre and, finally to the consumer.

Shipping – The transportation will be managed either through a courier service or through logistic partner of the firm depending on size of order and the consignment. The choice of carrier, transportation mode and scheduling of dispatch will be will be done by considering client’s location, public holidays etc.

Tracking and Tracing – The customer always wants to know the order status or whereabouts of the products during transit. The bar coding system with satellite communication will help to track the consignment. This facility is provided by most of the sellers as a value added service.

Payments – In case of B2B transactions payments are accepted through debit or credit cards. In B2C transactions the firm has to set a system which will generate online invoices, deliver credit and debit note outstanding report, payment reminders etc. using EDI. The system keeps client’s credit management record. It will be based on credit terms, payment history and volume of business. The transaction security is maintained at the time of online payment by the client.

Order Postponement, Cancellation and Substitutions. –The policy regarding postponement, cancellation and substitution is defined with due care. Sometimes due to problem in supply chain or circumstances beyond the management’s control the firm have to inform customer in time and may request for cancellation of orders. Alternatively the firm may offer for substitute product products or postpone the delivery.

Reverse Material Flow – This is the last stage of operation. Sometimes may returned the product if he do not like the product, or it has been damaged during transit, or the product performance is below expectation. In such a case company needs to evolve a product return policy. To avoid customers dissatisfaction this policy should be carefully designed and implemented.

So it can be concluded that E-commerce logistics efficiency and effectiveness depends on comprehensiveness of web based logistic solutions. Operational efficiency improvement is a continuous process and requires timely communication across the firm, customers, distribution centers, manufacturer, vendor, transporters and the like. E-commerce logistics is a collaborative solution to improve web business.

Brief case study of Dell Computers

This company represent one of the most successful e-commerce logistics and supply chain management. To compete with giant companies like IBM, Apple and Compaq, Dell has adopted a different strategy to market their PCs. They chose e-commerce route. To order a PC with desired configuration and specification, the customer has to log on to Dell website, place an order and complete online formalities. The system installed will record the order placed. Then the system estimates the demand of various components and put orders for required parts on the various suppliers. The suppliers then deliver the parts to predetermined supply centers where the computer is assembled. While registering the order, the system communicates the details of the customer and delivery location to the logistic partner. The office of the logistics partner nearest to the Dell supply centre gets activated to pick up the product for delivery. The efficient process results in good inventory management and total customer satisfaction. ( Case study is based on Internet search – Supply chain of Dell )

Bibliography

  • Bajaj KK and Nag Debjani, – From EDI to Electronic Commerce, Tata McGraw- Hill
  • Bajaj KK and Nag Debjani, – The Cutting edge of business,- Tata McGraw- Hill
  • S. Banumathy and M. Jayalakshmi, – Retail Marketing, – Himalaya Publishing House
  • Search engine Yahoo.Com

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